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Over 50% of modernization projects miss the mark.

Here’s why.

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What’s holding up your modernization?

The benefits of modernization are compelling, but more than half of these projects fail. Most businesses lack the expertise, time and resources to undertake successful modernization efforts.

Studies show that there are four reasons why most of these modernizationprojects fail.

The four key causes of failureShort-term patchwork strategies

Failure to make a strong business case to the decision makers

Attempting legacy modernization projects without the right skills and expertise

A do-it-all together approach to modernization

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Short-term patchwork strategies

If your business plans for short-term solutions by treating each back-end application as an isolated problem, it will miss the opportunities for consolidated solutions. It will cost more and it may add more long-term technical debt.

A large European financial institution went the easy route when they needed to extend their systems to support operations in different countries with different regulatory requirements; they just created a copy of their original applications and modified them to suit the new requirements. It seemed a good decision as it reduced cost and time to deliver the solution required by the business.

Several years later, after a repeat of the original strategy, the institution was plagued with a portfolio six times larger than when they started, and with 90% redundancy in functionality. A few millions saved turned into tens of millions of unexpected costs to fix the situation.

Your company can minimize the overall debt faster and more effectively by creating a comprehensive strategy for all applications, with systemic approaches to monitor and manage these across the board, rather than attacking them individually.

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Modernization projects do not typically present a compelling business case. Rewriting an existing application that currently supports the business operation-even if not satisfactorily and with constraints—is a questionable endeavor that takes away budget and resources from investment in innovation.

That is, unless the modernization can be aligned with the changes that provide substantial business value and not just operational savings. If modernization translates into business enablement of key strategies—customer first, new channels, new markets, actionable insight as examples—the revenue and growth derived from these strategies can be incorporated into the business case, turning a losing proposition into a positive return on investment (ROI).

Your business case should focus on business benefits and demonstrate how costs are minimized and business strategies get enabled. Ensuring that modernization is positioned as a critical component or enabling strategic business initiatives, such as business model change, enterprise transformation or opening up a new channel, will drive business support and prioritization.

Failure to make a strong business case to the decision makers

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Some companies resist the ideas developed outside of their organization and attempt modernization projects on their own. These efforts are often unsuccessful and the leftovers impact the operational health and future of the operational platform.

A typical example is the global financial institution that attempted to replace an aging proprietary platform with a runtime emulation component that allowed them to eliminate a costly license of the main software component. Technical complexity, redirection of funding and resources to other urgent imperatives caused the project to halt in the middle and prevented completion of the replacement and removal of the emulation component, the final step.

Ten years later, the uncompleted modernization project becomes the root cause of runaway operational costs and an obsolescence nightmare that prevents the institution from expanding its business and client base.

Your business should partner with third-party experts that already have the tools, methods and knowledge to be successful with portfolio assessments and modernization. In addition to reducing risk by trusting the specialists, you will also allow your own resources to focus on strategic imperatives and leverage the modernized outcomes.

Attempting legacy modernization projects without the right skills and expertise

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While it can appear that modernization is an all or nothing treatment of obsolescence and complexity, it is generally a more successful strategy to prioritize into a clear and sustainable roadmap. This is all about balancing the cost of modernization against the realized value.

Incremental modernization is a technique that minimizes time and cost to value. It requires you to divide modernization needs into a sequence of steps that can be accomplished at a predicted cost and that deliver expected—and measurable—value. The roadmap then becomes a prioritization of modernization steps based on their value versus the cost ratio.

In order to succeed in an era of digital, mobile, internet of things and cloud computing, where agility and time-to-value is of the essence, you need to look at the bigger picture and be selective. You should identify the portfolio areas that are critical to the business and where modernization will create payback. Then, create a plan of action and execute with incremental milestones that deliver results along the way.

A do-it-all together approach to modernization

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Ensure your modernization project doesn’t fail.

Learn how IBM Digital Foundation works to make your modernization project a success. ibm.com/digitalfoundation